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Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas, and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performanc the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenu associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Green Beans $ 91,000 61,000 $ 30,000 13,580 $ 16,420 Sweet Peas $ 135,500 118,400 $ 17,100 22,340 $ (5,240) Tomatoes $ 158,700 123,300 $ 35,400 34,360 $ 1,040

Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas, and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performanc the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenu associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Green Beans $ 91,000 61,000 $ 30,000 13,580 $ 16,420 Sweet Peas $ 135,500 118,400 $ 17,100 22,340 $ (5,240) Tomatoes $ 158,700 123,300 $ 35,400 34,360 $ 1,040

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas, and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent Segmented income statements appear as follows: Sales: Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Complete this question by entering your answers in the tabs below. Revenue Less: Vanable costs Contribution margin Green Beans $ 91,000 61,000 $ 30,000 13,580 $ 16,420 Required A Required B Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none there is no effect.) Less: Fixed costs Operating profit (loss) Status Quo Sweet Peas $ 135,500 118,400 $ 17,100 22,340 $ (5,240) Alternative: Drop Sweet Peas Tomatoes $ 158,700 123,300 $ 35,400 34,360 $ 1,040 Difference
Transcribed Image Text:Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas, and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent Segmented income statements appear as follows: Sales: Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Complete this question by entering your answers in the tabs below. Revenue Less: Vanable costs Contribution margin Green Beans $ 91,000 61,000 $ 30,000 13,580 $ 16,420 Required A Required B Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none there is no effect.) Less: Fixed costs Operating profit (loss) Status Quo Sweet Peas $ 135,500 118,400 $ 17,100 22,340 $ (5,240) Alternative: Drop Sweet Peas Tomatoes $ 158,700 123,300 $ 35,400 34,360 $ 1,040 Difference
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